Monday, November 24, 2008

Yahoo! bought Kelkoo back in 2004 for Euro 475. News out late yesterday that they have sold it for Euro 100 million to Jamplant - a UK investment firm I have not heard of. This a significant loss for Yahoo! both in terms of capital losses but also in functionality. On the positive side for Yahoo because after three good years in 2007 the business lost Euro12 million. I can see the short term benefit but in the long term I think Yahoo will regret exiting meta-search. French language news story here including a table showing the turnover and losses. TechCrunch story here including English language version of the internal email.

International split is reflected in staff numbers with 1,600 total staff but only 340 in the US (but note another 6-700 more in outsourced US customer service).

On moving away from the opaque model and doing acquisitions in Europe

Was an easy decision to move away from the opaque model and air reliance as the business was shrinking. Now down to less than a third of the business being the merchant model and the largest part of that merchant model is hotel;

(not surprisingly) very happy with 2004 acquisition of Activehotels and 2005 acquistion of Bookings.com. There was some unhappiness at Active when the brand was dropped in favour of Booking.com but believes it was the right business decision. Boyd did not provide a direct answer to questions on whether he would expand the Booking brand to the US but did say "with a product in English and the strength of Google we can sell to anyone";

On Asia and Australia

(again) very happy with Agoda acquisition. It generated $30mm in gross bookings in Q3

Boyd was asked about the strength of Wotif in Australia. He reiterated that there is a lot of opportunity for more competition in Australia. Booking.com are opening an office in Australia with through "a person based in New Zealand" (I assume he means Agoda Chairman Adrian Currie Update - received a message from inside Priceline that Boyd was referring to someone else. Adrian Currie is based in NZ but is the Chairman of Agoda and head of Asia for Booking.com) .

On Mobile

In the US - about service and support, not transactions for now;

In the rest of the world - likely to be much faster to transactions on mobile; and

Generally -"have a mobile site that is caveman in its advancement but are focused on it".

On the Year ahead

Paraphrasing Boyd he said the following: There will be a shake out in the coming year. Companies that are well capitalised and watch expenses will do a little better. The industry survived and grew post 9/11 so we will get through this.

I have been at the Renaissance Hollywood Hotel this week as part 1,000 people attending the PhoCusWright 2008 Conference at this hotel. I have tried to be a good guest - no unnecessary demands of staff, tipping everyone that looks my way. I asked very nicely to be able to check out at 3pm rather than the 1pm they offered. "I am sorry sir but that will be an extra $25 per hour" was the reply. "But, I have been staying here for six days as part of a very large conference, surely you can be nice to me and extend my check out for no charge" was my polite reply. "Can't help you sir, we have to charge $25 per hour" was the response.

Clearly they do not have to charge me anything. But it is equally clear that they want to charge me more and have no need to reward me for a long stay. I see this an being greedy. The Renaissance Hollywood should give me two hours for nothing after six days of paying. What do you think I am being too demanding?

Thursday, November 20, 2008

Here is the video list where you can watch 13 minute presentations from the 32 companies from the PhoCusWright Travel Innovation Summit. You can select which one you wish to listen to. My pick of the top six are here. The six finalists here. You should also listen to YourTour, ekit, nileguide, planeteye, tripchill and travelbeen.

Have 400 Market Managers (hotel) world-wide that are working to get hotels to recognise that deals are needed but saw potential for those deals to come from the Travel Ad bidding, additional loyalty points, add ons etc to maintain price.

On acquisition, capital and the market

On Acquistions: When asked directly about who he would buy next Dara said - "we are going to keep our money stuffed in our mattress". Later "we don't think we will go on the acquisition trail in 2009". He went on to explain that with the state of the capital markets and the difficulties in access public capital sources (including debt) he wanted to keep his cash on hand to get through the next five years; and

On Going Private: Simply - there is no capital available for anyone to take Expedia private.

On integration and the merchant/retail model mix

Will keep the demand portions un-integrated (ie Venere brand remains). But supply side will be integrated. In other words will see Venere inventory (negotiated retail inventory) on Hotels.com and Expedia.com in a mixed model.

I posted on Monday some thoughts about the premium air fare product and the downturn/crash/eco tsunami. On Center Stage at PhoCusWright is Tim Simonds the MD of Customer Strategy and metrics for United Airlines talking about the increased focus that United will be making on the premium customer. Simonds highlighted that in the US Air market the premium passenger sector represented 30% of revenue in 2007 but lept to 50% in 2007. He was open and honest that he did not know if the numbers would hold up in 2009 but premium will still be a core focus as "a very attractive part of the market".

It will hold up in his view because United is rolling out new product. He displayed this product to us - which looked like an Emirates, Singapore Airlines or Cathay Pacific advertisement from 2004 - so is only a revolution if you are looking solely and US based carriers. When asked on this point Simonds admitted that the product will not be as "good as foreign flag carriers. The first step is to be number one in the N.American market".

In response to this a mini revolution broke out on the Center Stage floor. Questions were asked about what this meant for United's commitment to non-Premium customers. Charlie Leocha of Tripso put it simply "Doesn't this mean that United abandoning the back of the plane?".

Simonds answer "we try to give a high level of service consistent with the level of value that each customer has paid. But agree the bar needs to be raised for everyone." To another version of the question he answered "we need to enhance economy plus but quite simply there is a large and increasing differentiation between economy and business."

In a follow up Simonds said that he thought this strategy was appropriate because (and this is the main point) " United do not see the premium customer as making decisions based on price." I am trilled to hear a US airline rep talk about lifting the level of service and experience but I do not agree that premium customers will not be making price based decisions. I have been a top tier Qantas flyer for now 8 years. Yet this year I flew more long haul economy that any time since 1999. Price is now a greater factor in my decisions that any time in my non-lawyer career. It will be a factor in 2009 for a large majority of premium flyers. US airlines need to register this and improve the "behind the curtain" products.

Philip Wolf is giving his opening monologue at the Centre Stage part of the PhoCusWright conference in LA. The second storm in the "Perfect Storm" is the merging of models in Travel between the media model and the retail model. The media model being eyeball focused, content companies that generate money from advertisers (think TripAdvisor and Away in the travel space, Yahoo!, MSN and online newspapers in the more general media space). The retail model is based on transactions direct with consumers (surely you don't need me to give you examples).

But I think this shift is less of a big deal from the consumer point of view. The consumer is coming to online travel retailers and media companies with the same question and desire. Whether they come to a retailer or a media company they are still asking "where should I go and where can I get a good deal?".

My view - focus on answering the consumer question rather wondering which business model we are in or should be in. Answer the consumer need first and let that drive the product and business model needs.

Tuesday, November 18, 2008

32 companies spent today presenting at the PhoCusWright Travel Innovation Summit. Six get to move onto the Centre Stage sessions. The six will be announced tomorrow at lunch time based on anonymous voting during today's session. Here is my pick of the six (note have to pick two each from New, Emerging and Established Companies). In no particular order

Pick 1 - Uptake.com: I have spoken about Uptake before. They have built a meta-search business for travel reviews and built a search methodology that goes well beyond the tradditional capabilities of Google, Yahoo and MSN. [Emerging]

Pick 2 - Triporati: I have long been a fan of last.fm and Pandora. Both are music companies that have approached (respectively) a compunity and a genomic approach to helping people to discover new music (rather than search for known music). Triporati is doing the same for travel. Focusing on discovery rather than search through breaking down travel into 62 "DNA" elements and matching those against 1,200 destinations. [New]

Pick 3 - Dealbase.com: The test of innovation is an idea that no-one else thought of that has been executed well. The idea for deal base is a qualified lead generation business for OTAs and hotels. This is a new idea for the travel industry and the execution looks good. [New]

Pick 4 - Rezgo: A supplier and vendor matching system combined with long tail distribution management system. No other product in the 32 like it. [Emerging]

Pick 5 - Worldmate: The best of the mobile solutions I saw (but just). Very close competition with TripChill (see this post for more on mobile). Have given my vote to Worldmate (after a close debate with myself) due to its distribution deal with Nokia. Distribution is the hardest part for a mobile app. [Established]

Pick 6 - Fogglight: Home & Away have built a component based trip planning site builder. Enables travel companies such as hotels and tour operators to set up a whitelable sales operation of complementary product providers (ie a hotel building a web and packaging site using Expedia's white label solution). With acceess to content, a contact management system and more. [Established]

Cute story from the Spectator. How to keep getting yourself bumped from BA flights to generate a profit and a long weekend in London. Not sure of the truth of it. The fact that the Spectator gave it a run should mean something but old media has been fooled in the past.

The Assistant: TripChill, WorldMate and to a lesser extent iM@ focus on giving consumers real time local information. TripChill and WorldMate impressed me with the real time ability to check the latest travel information associated with an itinerary around flight changes, hotel reservations and support information (weather, parking, driving options). Looking at these tools in action, I can finally see delivery on the promise that mobile has been making to online travel for ten years. The ability for a traveller to be able to seamlessly update and change trips based on conditions that can only be known through real-time connections is what we have all be wanting from mobile.

The locator and sharer: iM@ and ekit focus on the destination - what to do when you are there. iM@ is an adverting and offer driven business. Focused on pitching activities to travellers driven by destination and advertiser promotion. ekit is something else entirely. This (Australian based) company made it's start in international phone-cards and global SIMs. The product they displayed here was an innovative (and at times unsettling) travel journal product where GPS technology linked a SIM purchased from ekit. This SIM can be linked to an online travel journal (think blog). The travel journal can be instantly updated as to where to you are every time you make a phone call. That's right you make a call, the phone registers where you are and then posts to the travel journal your location and time of call. Posts can be enhanced with SMS text content, photos and more. This is the ultimate trip blog tool as it knows were you are but is also very scary because...well..it knows exactly where you are and what you are doing. I love the idea but feel very uncomfortable using it.

Looking at these four companies I feel like we finally getting somewhere with mobile in online travel.

Am at the PhoCusWright Travel Innovation Summit. 32 companies - mixture of start-up and mature companies- are pitching a new product in the hope of gaining industry support. We are half way through the summit and a theme is emerging very quickly around travel planning. No surprise of course. Again and again at non-travel internet events it has been the trip planner that has generated the buzz. Witness TripIt and the 2007 TechCrunch40 event and GoPlanIt at the 2008 TechCrunch50 event. Today at PCW we have already heard from TripIt, TripJane and Travelmuse (update and now YourTour update 2 and now NileGuide). At WebInTravel we also heard from entrip. Common functionalities are coming through each of these companies - the ability to integrate and add trip elements and content from other websites; the ability to share and build a network; and the ability to build a "living" itinerary with all elements.

The differences are just as stark as the similarities. Each of these companies (and others) are approaching the business from a different angle.

In the case of TripIt - the experience starts with using TripIt to combine the disparate itineraries that appear in email from an airline, hotel provider, destination service etc.

With entrip - the experience starts with a map. Consumers connect the points they wish to travel between and entrip provides (or facilitates) the content and booking functionality.

At GoPlanIt - the experience starts with a destination. Crowd sourcing and social networking elements recommend a trip itinerary including details on activities.

For Travelmuse - the experience starts with content. A regularly published online travel magazine that has morphed into a trip planning and sharing system.

With YourTour - the experience starts with traveller desired experiences . Building a trip recommendation based on the broad trip desires entered by the consumer.

Through NileGuide - the experience starts with the desire to build a guidebook for a destination. One document to replace the the myriad of documents that even the simpliest of trips end up generating.

I was working on setting some criteria for judging which of these will be the most successful. Trying to set up a scoring or ranking system to judge on areas such as technology, UI, marketing, business model and people. I realised that if I continued with this thinking, then I was setting me up for a very complicated task (lots of work). Critically I quickly came to the realisation that this list of judging criteria was all but irrelevant because there is one success factor that is more important. I call it "survivability". It seems circular that the most important cirteria for success is the ability to survive but in the case of a travel 2.0 start ups that are content heavy I see the most important factor for success the ability of the company to survive for a the next two years. To keep the product up, live, growing, changing and adapting. Staying alive while the long path to consumer acceptance is trod. Giving the company time to test itself and prove that their approach is the right one. I have a personal favourite in the list and there one that I don't get but that's not important. What is important is that these companies need to make sure that they have a lot of runway (ie can survive for a long time on the money that they have) and are able to change and adapt on a dime.

Was sent a question as a follow up to the recent post on the airline industry with fuel at $60 per barrel. Was asked "Wanted to get your thoughts on the possibility of airlines lowering their prices. Most think the airlines will maintain prices despite the falloff in passenger demand".Here is my reply

I have been trying get my head around the two competing airline trends. Firstly the decline in demand but also the corresponding drop in capacity. The current economic pain is in effect being absorbed by the airlines through reductions in supply. This can only last so long, as there reaches a point where airlines cannot cut any more (ie cheaper to keep planes in the air than on the ground). The other factor that will hit in the next month or two is a dramatic reduction in premium fare usage by consumers. I have looked a very unsophisticated statistical sample (my peers, friends and check-in staff at premium class counters) and have noticed people flying long haul economy for work they had not done so for ten years. This sent me to think about the costs of long haul premium travel now and historically.

I remember that back in 1990 when I first starting looking at travel as more than just a wide eyed kid, the gap from economy to business to first was double:double. Business was twice the cost of Economy and First was twice again. An economy trip to Europe from Australia was $2,000-2,500, business was $4,000 - $5,000 and first was $8,000-10,000. Now, 18 years later you can still get an economy fare to Europe for around $2,500. But the gap to business and first is times four and times one and a half. Business is now four times the cost of economy and first is now one and a half times the cost of business. No doubt that the quality of the 2008 version of premium product is light years beyond that of 1990 (flat bed as standard, limo pick ups, hundreds of hours of interactive entertainment, world class restaurants in airport lounges etc) but the price gap is now significant. Of course, airlines have looked to fill that gap with premium economy (twice the price of standard economy). But the 2008 version of premium economy is not as good as the 1990 version of business (seats smaller, pitch not as deep, staff not as attentive).

The airlines were able to justify/maintain/get away with this increasing the price gap/multiple from 1990 to 2008 due to a booming economy and ever increasing T&E budgets. But now the economy is boomed out and T&E budgets are being wiped out. From this I believe that the first hit on pricing we will see is in premium classes. I expect that very early next year (if not starting right now). Meanwhile capacity cuts will continue. Then some tipping point will hit where capacity cuts have reached as far as they can and early cuts in premium have gone as low as they can. Then economy fares will hit the floor and more airlines will hit the wall.

I say all this back on good old fashioned blogger intuition and anecdotally driven research. I have not done the deep price and capacity analysis that should accompany an answer like this - but that is the blogger prerogative.

I am now in LA for PhoCusWright after ending last week in Hong Kong. The flight from Hong Kong was long and painful. Twelve hours in economy class with no reading light and no VOD. That sounds bad - but it is nothing compared to the emotionally charged and draining time spent at gate 64 of Hong Kong airport. For those that know Hong Kong well, gate 64 is next to the entrance/exit of the the second of the Cathay Pacific lounges at Hong Kong airport. I therefore left the lounge with only 15 minutes to go before departure. I arrive to two sights. The first is the long long queue of people to join this soon to be full (if not over booked) 747.

The second is a collection of very serious and official looking people. A mixture of paramilitary security officials, flustered immigration agents, panicked Cathay attendants and four paramedics. Two of the paramedics are working furiously on a prone man in his mid sixties. One is bashing his chest. The other is pumping a hand ventilator with determination but also a sense of loss. Then they all seem to stop. They stop the CPR, they stop the hand ventilation and they change the look of determination to one of resignation. Then efficiently and respectfully they load the man onto a gurney and rush him out toward the main part of the terminal. The paramedics continue to try resuscitation techniques but it clear from their behaviour and the state of the patient that it is too late.

I have never seen death up close before like this. It does not have any of the complexity or drama that you read or see in theatre or cinema. It is simple, a man falls and other people try to pick him up.

Tuesday, November 11, 2008

Headline says it all. Wow. TechCrunch is carrying the whole story on this monster sized fund raising round for vacation rental company HomeAway. Makes money raised to date $459mm. TechCrunch state the pre-money valuation is $1.15 billion but does not say what the source is but remember that the biggest online travel company Expedia (EXPE) has a market cap currently of $2.38 billion. To give another example Google bought Youtube (top 5 site worldwide) for $1.65 billion. At first glance it is hard not to agree with TechCrunch's view that this is overvalued. What do you think is the vacation rental space hotter than first thought?

Yammer.com has been pitched as Twitter with security controls. That is a micro-blogging/updating service where to can limit the "followers" to ensure internal security. I it supposed to be better suited to corporate users. I have just started to trial it with my team. Will let you know how it goes. I first heard of Yammer while watching the TechCrunch50 list, looking for travel companies. Yammer was the TechCrunch50 winner.

Of course the day before I decide to kick off the trial the first piece of bad news for Yammer (capacity issues) hits the interwebosphere (TechCrunch story here).

Saturday, November 08, 2008

Spotted the following online advertisement on the NRMA website (an Australian AAA company) for Expedia. An automobile website is a perfectly good place for a marketing team to buy for a banner campaign.

But the timing of the ad is no good. Someone in IT scheduled an outage and either forgot to tell the marketing team or it was too late. Here is the landing page from clicking on the ad

In a (clearly) unrelated move, news out today that Ctrip is suing Qunar. In a story that looks like the recent battles between RyanAir and the meta-search players, the fight is over Ctrip's allegation that Qunar is screen scraping Ctrip and that such a thing is illegal.

Very few details out their in Web land about this legal action. My guess is (with no knowledge of the Chinese legal market) is that RMB 1,000 is the nominal damages amount in Chinese courts. Really what Ctrip is looking for is an injunction to stop Qunar from scraping to either force Qunar pay for access or to hurt the Qunar business and shut down a competitor.

I had cause to think about this again today on the back of a press item and an email.

In the press (Hotelmarketing.com) I read that VFM Interactive Inc and Leonard Media BV have combined to create one of the largest databases of images and travel media content. The new company will (creatively) be called VFM Leonardo. No clear picture yet on how management and services will be combined. The part of the story that is interesting to me is trying to decide are these companies coming together from a position of strength - trying to sure up and own the rich media side of the hospitality industry. Or - are these companies in a panic? Are they having their business models destroyed by the generic photo sites like Flickr and travel specialist sites like the bed jumpers at Hotelsbycity.

I have not heard of any series declines in Leonardo's business so will assume the former theory for now. I also believe that there continues to be a business model for professional/editorially driven content to be supplied through B2B distribution. Suppliers and intermediaries need a trustworthy source for content and are not yet ready to trust the user 100% or have the means for filtering and searching (easily) the mass of UGC that exists. The company could open up to UGC but needs to keep very tight control. So tight that it might as well stay professional.

So at this end of the spectrum we have a mid-large corporate entity with a million pieces of professional content, needing to stay professional.

At the other end I received an email from Erik Budde, the founder and CEO at AboutAirportParking.com. As the name suggest AboutAirportParking is targeted at providing a directory of all the places you can park near an airport. I am a traveller that is constantly looking for ways to avoid the absolutely scandalous charges that the Macquarie Bank owned Sydney Airport are charging for parking. I get the need for this product. Erik recently bought out the other owners/investors in the site and relaunched in June this year. There is some leakage outside of America in the site but basically it is US only with 500 parking lots at 100 airports (according to Erik).

I like this site. You can search and (sometimes) book airport friendly but cheaper parking, indexed by distance, facilities and maps. It is a site that needs editorial management to set up the index, manage and prioritise content and associate travel resources. But this is a site perfectly suited to and calling out for huge doses of UGC. Erik has started this (see page for Crowne Plaza Hotel Airport Parking) but the potential is so much greater. Erik admitted to me for instance that they are trying to expand internationally but having trouble collecting data. Regarding Australia he said

"We recently added Australian airports, but I confess that we've had a harder time collecting that data and it's been less of a priority so far."

This is where the mass of frustrated and web obsessed Australian travellers (there are others like me I keep telling myself) can become unpaid biz dev heads and content writers. Starting with an editorially managed core but allowing more user interaction, tips and reviews would serve AboutAirportParking.com very well (a la TripAdvisor). Am sure Erik is already aware of this.

Rakuten Travel is the number one online travel company in Japan. This makes them a big player globally. With gross bookings in excess of $1 billion in hotels, Rakuten is easily a top ten online hotel company, maybe even sneaks in as number 5 behind the "big four" of Expedia, Orbitz, Travelocity and Priceline (in terms of hotel sales online).

There is a lot more background in the Hotelmarketing article which I suggest you read. If you are sitting in Europe dismissing this as another Asia story by Tim I urge you to reconsider and keep a little eye on Rakuten and the number two Japanese palyer Jalan/Recruit. Why? Because both are billion dollar plus players that are looking outside of Japan for places to expand and grow.

WebInTravel hosted a "Start-Up Pitch" session. Much in the form of a very scaled down TechCrunch50, this session saw a short list of three companies engaging in a strict 5 minute pitch to a judging panel made up of investors and venture capitalist. The three finalists in the pitch were

- entrip. a travel organisation company based in India. Presented by founder and boss Anthony Hsiao. This company is trying to be the ultimate in travel organisation mash-ups. A way to bring together all of the elements of planning, tracking and sharing a trip. It ha as UI that enables a traveller to plot on a map where they are going and then have automated links to content, information, booking profiles and a place to store and share. Planning sites are gaining traction recently. GoPlanit and TripIt have been passed members of the TechCrunch50 (interview with GoPlanit here and TripIt here). entrip's difference is in its UI. By using a map based approach entrip gives the user a very different approach to planning and booking. The site has just started so there are challenges ahead fro Hsiao and the rest of the team but is a great beginning.

- Conference Bay is trying to be the eBay/Priceline of conferences. A market place that gives conference organisers and opportunity to distribute their tickets on name your own price/auction model. A clearing house for conference tickets. The theory being that every incremental ticket is pure profit for a conference organiser given the high sunk costs. I see the market here but the challenge is that conference organisers are very wary of open up any channel that promotes discounting. To get a conference up and running it is critical to get people booking early rather than waiting for deals and the last minute. That said, with economic doom and gloom all around us this might be the perfect time to be an aggregator of the potentially dropping demand for conferences.

- TripFilms was the final pitch of the day. The pitch was led by Jim Donnelly (founder and former boss of the now Sabre owned IgoUgo). Jim is an investor in TripFilms, the TripFilms founder and boss is his ex-partner in IgoUgo (Tony Cheng). Jim's pitch was a direct one. TripFilms is IgoUgo but in video. A place for the creation and distribution of high quality destination and travel videos.

Who won? entrip pulled the "people's choice award" by wining the popular vote from the audience but TripFilms secure the title by winning over the judging panel. The panel was impressed by the pedigree of the founders of TripFilms (they had already built and sold a company) as well as the immediacy of the business model around video content. On Conference Bay the panel expressed the same concerns I have above. For entrip, the panel loved the site but belived there were a lot of challenges in getting the distribution right.

Monday, November 03, 2008

Quick update on recent post on CWT France moving their GDS contract from Amadeus to Sabre. An industry insider from Europe sent me a few info pieces to add to the rumours around this migration. Story is that the migration has been in the works since as early as late 2006 - under the secret project name "Project Score". There have been commercials issues for the delay from then until know but (as is often the case) there are some technology issues. Looks like there was/is some work to be done between Sabre and SNCF that has been problematic. This all conjecture and innuedo but adds to a great story.

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